On June 10, 2020, the Minnesota Supreme Court issued a decision affirming the Court of Appeals and upholding the determination that the Minneapolis Paid Sick and Safe Time Ordinance (“Ordinance”) applies to employers outside of Minneapolis, finding that the Ordinance was not preempted by state law and did not violate the extraterritoriality doctrine.

In 2016, the Minneapolis City Council passed the Sick and Safe Time Ordinance. The Ordinance allows employees who work in the geographic boundaries of the City of Minneapolis for at least 80 hours a year, to accrue one hour of sick and safe time for every 30 hours worked, up to a maximum of 48 hours in a calendar year. After its passing, a number of business entities lead by the Minnesota Chamber of Commerce sued the City of Minneapolis for a declaration that the Ordinance is invalid to the extent it purports to apply to employers with no offices or other physical location within the city limits. The district court upheld the validity of the Ordinance as it applied to employers within Minneapolis, but issued an injunction preventing the Ordinance from applying to employers outside of the city. For more details about the Ordinance and its procedural posture, please click here.

In Minnesota Chamber of Commerce v. City of Minneapolis, the Minnesota Supreme Court first analyzed whether Minnesota state law preempted the Ordinance under two different theories: conflict preemption and field preemption.  The Court found that the state law, Minn. Stat. § 181.9413, governing employer-provided sick and safe time, and the Minneapolis Ordinance did not present an irreconcilable conflict between each other. Therefore, the Ordinance was not preempted under the theory of conflict preemption. The Court further found that the subject matter of the Ordinance, employer-provided sick and safe time, has not been “so fully covered by state law as to have become solely a matter of state concern,” nor was there any legislative intent that the state law was meant to preempt local action by occupying the field of sick and safe time. Additionally, the Chamber could not show that the local regulation would have unreasonably adverse effects upon the general population of the state. Therefore, the Court found that the state law does not occupy the field of employer-provided sick and safe time.

The Supreme Court then considered the extraterritoriality doctrine, for only the third time in its history. The majority stated that a court must look to the purpose and effect of the regulation when facing a challenge to a local ordinance based on the extraterritoriality doctrine. The court ultimately found that the Ordinance’s purpose was to safeguard the public health and welfare of all persons working in the city of Minneapolis, regardless if their employer is located outside the city, and to regulate activity within the geographic limits of the city. For the foregoing reasons, the court found that the Ordinance was a valid exercise of municipal authority and did not violate the extraterritoriality doctrine.

Justice Anderson, joined by Chief Justice Gildea, wrote a dissent arguing that the Ordinance violated the extraterritoriality doctrine due to its reach beyond the borders of Minneapolis. “[T]he Ordinance applies to businesses outside of Minneapolis and requires those businesses to perform activities outside of Minneapolis, and both the City and the court concede as much.” Justice Anderson warned that the majority created a new test by looking to the primary purpose and effect of the Ordinance, rather than the statutory authority as established in prior case law. He stated that the court’s application of this new test is alarming and ignores the broader, state-wide effects of the Ordinance.

To read the full decision, please click here.

Any business with employees who work in Minneapolis, whether or not the business has offices within the city, should be aware of and comply with the Ordinance.  Larkin Hoffman employment attorneys stand ready to assist businesses who are impacted by this ruling.